The balance is rapidly shifting in the race to appoint the Federal Reserve chairman, a position President Donald Trump will secure.
According to a recent report by the Wall Street Journal (WSJ), Federal Reserve Board member Christopher Waller has joined the ranks of those preparing to interview Trump. Previously considered a “surprise candidate,” Waller has now become a favorite among Wall Street’s voters and a strong contender against Kevin Warsh and Kevin Hassett.
Trump is expected to meet with one or two more candidates this week and next week for the Fed chairmanship. Sources close to the process say the meetings are progressing quickly, but could be postponed or canceled depending on the President’s assessment. Last week, Trump announced that he had met with former Fed official Kevin Warsh and that Warsh and National Economic Council Director Kevin Hassett were high on his list of candidates.
Market expectations are also rapidly changing in parallel with these developments. In the Kalshi prediction market, Hassett appears to be leading with approximately 50% probability, while Warsh’s rate is at 29%. Christopher Waller, meanwhile, is attracting attention as a candidate gaining momentum with his rate rising to 16%. This picture reveals that the race is no longer limited to just two names.
Christopher Waller was appointed to the Fed Board of Governors by Trump and confirmed by the Senate in 2020. Recently, Waller has emerged as one of the strongest advocates for interest rate cuts, presenting consistent and academically sound arguments for rate reductions throughout the year. While the Fed has implemented 25 basis point cuts in its last three meetings, Waller was the only one to vote for a rate cut in July, opposing keeping rates unchanged.
Waller’s positive image on Wall Street stems from his ability to manage internal Fed disagreements and his background as one of the first proponents of some of Jerome Powell’s recent arguments for interest rate cuts. Indeed, in a WSJ economist poll conducted in October, Waller emerged as the most preferred candidate for the Fed chairmanship.
However, Waller’s candidacy also raises some questions among circles close to Trump. While Warsh and Hassett are known to have stronger personal relationships with Trump, Waller’s potential vote in favor of a half-point interest rate cut in September 2024, before Trump becomes president, is seen by some as “disloyalty.” This situation still puts Waller at a relative disadvantage.
Trump, however, makes no secret of his past choices regarding the Fed chairmanship. The President states that appointing Jerome Powell in 2017 was the result of “bad advice” and that he will be much more cautious this time. Treasury Secretary Scott Bessent also indicates that Trump will most likely announce his decision in early January and that the process is entirely at the President’s pace.
*This is not investment advice.